RAILROADS: Big Stick, Big Carrot

To live up to his promises to rehabilitate the New York Central, Robert R. Young has chopped costs, closed down maintenance shops, and ruthlessly cut the payroll on his railroad. Result: a net profit of $1,100,000 for September. Last week Bob Young laid aside the stick in favor of the carrot. To the Central’s$100,000-a-year President Alfred Perlman, Chairman Young offered a stock option deal. Under the ten-year deal, President Perlman will be able to buy 32,000 shares of Central stock at $19.87½ per share, 75¢ above the current market price; he can buy 20% in two years, another 40% after three years, and the rest in 10% yearly lots.

For its hourly employees, the Central also announced a stock installment plan to let workers buy up to 200 shares of stock at the market price through payroll deductions over a three-year period; they will be able to sell the stock back to the railroad at the purchase price if it goes down. And finally, for all employees, the Central will start a bonus system under which any man who contributes to the company’s growth in an “extraordinary” way can win as much as a $50,000 yearly bonus from Central profits after dividends.